The government has launched the “Work Incentive Transport Subsidy Scheme”, with the following objectives:
(1) To relieve the burden of travelling expenses commuting to and from work on the part of low-income households with employed members
(2) To promote sustained employment
Applicants must meet the monthly income and asset limits of the household (e.g. for a single person, the monthly income cannot exceed $7 300 and the assets cannot exceed $72 000) and work no less than 72 hours per month in order to apply for a subsidy of $600 per month.
(a) Do you think that the scheme can achieve the above two objectives? (4 marks)
(b) Discuss the effects of the scheme on
(i) labour mobility, (3 marks)
(ii) income inequality, and (3 marks)
(iii) the unemployment rate. (3 marks)